Inheritance Tax

You could be forgiven for thinking ‘Inheritance Tax won’t affect me!’ Of course you’d be right, it wont affect you. It will, however, affect your children and your grandchildren.

There was a time when Inheritance Tax (IHT) was something only the rich had to worry about. But due to soaring house prices over recent years, increasing numbers of people are falling into the IHT net. Many of those affected could be forced to sell the family home within months of inheriting it.

Assets over £325,000 upon your death could be charged to Inheritance Tax at a whopping 40% - but unlike many other taxes there are plenty of things you can do now to make sure you pass on as much of your wealth as possible to your family and friends, rather than to HM Revenue & Customs.

Inheritance Tax has many exemptions and relief’s here are a few to consider:

MAKE A WILL. A Will makes your wishes concrete, and stops any assets being divided under the rules of intestacy. It can be the first step to reducing an Inheritance Tax bill.

MINIMISE YOUR ESTATE. You can’t be taxed on money that was never yours. Have any life assurance plans written under trust.

THINK ABOUT YOUR HOME. If you own your home as ‘tenants in common’, on your death, your share may be left to someone else to keep down the size of your estate.

EXPLORE TRUSTS. Its possible to enjoy an income from money paid into a trust, even though you are no longer the legal owner of the money.

USE ANNUAL ALLOWANCES. Giving away your money will reduce your estate, providing you survive for seven years for most of the gifts to escape the IHT net. However there are payments which are exempt.

SPEND IT. Do not lose sight of whose money it is in the first place. If you are worried your wealth is simply building up a tax bill throw off the shackles and enjoy yourself.

We can't spend your money for you, but we can certainly offer you sound, expert advice on the other points mentioned above.

Affinity offers bespoke solutions for Inheritance Tax mitigation. Sound planning in respect of both lifetime transactions and Will making could ensure your assets go to those you intend to and not into the treasury’s coffers.

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